Behind the calls for revaluation lies an erroneous assumption — that
rectifying the trade imbalance will aid the U.S. economy. In reality,
say the
authors, the growing Chinese surplus has strongly benefited
U.S. companies and consumers. U.S. companies have achieved strong
profits by tapping China’s low labor and production costs. They note
that more than a quarter of China’s exports are generated by U.S.-owned
corporations, who eventually pass on the savings to American consumers.
In addition, China’s central bank has been able to buy U.S. debt,
further sustaining the U.S. economy.

I've always thought this, but the article states it rather eloquently.

China today has nearly 3.5 million such private companies, according to the All-China Federation of Industry & Commerce, a Beijing trade association. Revenues in the private sector skyrocketed from $5 billion in 1989 to $241 billion last year, accounting for 15% of China's gross domestic product.

For emphasis, please note their revenue increased from $5 billion in 1989 to $241 billion last year.

Stating the obvious: Most companies would be happy to see revenue growth of 9-10% each year, so it's impressive that to see the GDP of a country with 1.3 billion people (each of who is also seeing their incomes rise 9-10% each year on average).

For those of you who saw this as a great buying opportunity, you've been greatly awarded by a recent run-up in stock price. CNTF's stock price has risen from $8 on 10/14 to $10.39 on 10/19, a 30% increase in 4 trading days. CNTF announced their revenue and profits would fall within the range analysts had predicted. Also, Business Week came out with an article that was bullish on China Techfaith Wireless, giving CNTF another boost. Importantly, Business Week mentions CNTF is ahead of rivals in developing 3G models.

China Techfaith Wireless (CNTF) reported today that their FY05 revenue and earnings will be on the low side of their guidance. This is actually good news since their stock price has actually fallen about 50% since their IPO. Based on a Kaufmann Brothers report, we estimate their 12-month stock price potential to be between $15 and $23.

Today's news was actually good news and CNTF's stock price was up nearly 10% today (Oct 17). This is a great sign since the Chinese cell market is in a temporary slump since many companies are scaling back operations to gear up for the rollout of 3G. See the following Cellular News article on 3G Wireless Will Reshape China's Telecom Landscape.

Further fueling CNTF stock rise today is an Business Week article on CNTF called TechFaith: A Firm Grip On Handset Design. Business Week is bullish on CNTF, saying "TechFaith's models are all over China -- and, increasingly, the world." CNTF, which was founded by former Motorola employees, is partially owned by Qualcomm (QCOM) and Intel (INTC). Importantly, Business Week says that CNTF is further along in 3G work than rivals, something that will help best position CNTF for the upcoming 3G boom.

The president of China's Shanghai Media Group has resigned from the board of directors for NASDAQ-listed Shanda Interactive (SNDA), fueling rumors that Shanda will not be developing a set-top box that would bring games and the internet to millions in China.

At a meeting of the G20 in China, Chinese President Hu Jintao says that political stability is a key factor in driving economic growth in China. He says:

China has ample labor resources, large demand in its domestic market, a high savings rate, and social and political stability. All these have been favorable conditions for the relatively high economic growth in China.

Projections are that, by 2020, China will have a GDP of 4 trillion USD (or 3000 USD per capita).

According to Bloomberg, China's trade surplus will be $100 billion in 2005, compared to $32 billion for 2005. For comparison purposes, the trade deficit for the US was $620 billion in 2004 and will likely amount to about $730 billion in 2005.